Mateo Has the Choice of Two Bonds, One That Pays

Multiple Choice

Mateo has the choice of two bonds, one that pays 4 percent interest and one that pays 6 percent interest. Which of the following situations is most likely?

A) The 6 percent bond is less risky than the 4 percent bond.
B) The 6 percent bond is a Canadian government bond, and the 4 percent bond is a junk bond.
C) The 6 percent bond has a longer term than the 4 percent bond.
D) The 6 percent bond is a Canadian government bond, and the 4 percent bond is a provincial bond.